Shoots from the Grassroot Institute of Hawaii – Feb. 13, 2004-The Knowledge Problem

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The problem is known in economics as the knowledge problem, and we are getting a grand display of it here in Hawaii. It is the problem that plagues all central planning and is the downfall of all centrist, socialist efforts. It is the issue that confounds all government planners and renders their plans awry.

The primary tenant of the free market is that prices determine who gets what, according to what each person can afford. This is a fact of nature since no service or commodity is infinite in scope and not everyone can avail him or her self of an endless amount. This is called the scarcity of resources. So prices constrain a person from buying an endless supply of anything.


The greater the demand for that product, the more the prices will rise, as is also the case the scarcer it is. As prices rise, the more other producers will be induced to either enter the market and supply more, or, conversely as consumers, buy less and lessen the demand. This whole process is automatic and nearly immediate, responding to current circumstances. Prices adjust according to both supply and demand.

No individual or group of individuals can project what tomorrow